Will the Down Payment Assistance Money Dry Up!

I never was a big fan of the Nehemiah Program.

Since I have a real estate license as well as a mortgage license, I look at both sides of the issue.

Down payment assistance always seemed to bit less that honest to me. I know, you disclose it to everyone, but why not just give someone a 100% loan.

Now FHA is re-thinking the whole concept. They have submitted a rule change that will no longer allow this practice. I know that some deals will dry up, but it never did feel right.

VA has a 100% program so why not FHA?

Realty Times website has followed this issue pretty well. Here is the first article that mentions the rule change that was put into the Federal Register: http://www.inman.com/news/2007/05/1/tighter-down-payment-assistance-rules-proposed.



Let's face it. There never was a free lunch. Someone always had to pay for it.

In the case of down payment assistance, the buyer paid for it because the sales price would be inflated.

The mortgage company was put at risk as well since they now loaned money on an inflated value.

It makes the most sense, to allow 100% loans. That way everything is very clear. The market will adjust since money is now sitting idle and needs a place to go.